O-I Reports 2Q 2017 Results

Owens-Illinois, Inc. (OI) reported financial results for the second quarter ended June 30, 2017.
 
For the second quarter, earnings from continuing operations were $0.85 per share (diluted), compared with $0.65 per share in 2016, primarily driven by improved segment operating profit and lower interest and tax expense.
 
Net sales were $1.8 billion, on par with prior year second quarter. Price increased 1% on a global basis, which was offset by modestly lower sales volume and adverse currency translation. For the year-to-date period, net sales increased more than 50 basis points compared to 2016.
 
Earnings from continuing operations before income taxes were $152 million for the second quarter compared with $141 million for the same period in 2016, an increase of 8%.
 
Segment operating profit of reportable segments for the second quarter of 2017 was $252 million, an increase of 8% compared with prior year. More than half of the increase was generated in Latin America, which benefited from sales gains and the early adoption of a total systems cost approach to managing structural costs. The 10% improvement in Europe was primarily driven by higher production volume and continued success in improving total systems costs.
 
“O-I has delivered a strong first half, reflecting strong business performance from higher shipments and the benefits of our total systems cost approach. We continue to focus on our transformation efforts and reach performance levels that position us for another year of improved financial results,” said Andres Lopez, CEO. “Our teams are driving sales volume in line with our expectations, continued operating stability, and lower total systems cost.
 
“With half of the year behind us, expected strong business performance through the second half and favorable non-operational tailwinds, we are raising our guidance on our full-year earnings performance,” Lopez added.
 
In the second quarter, in Latin America, sales volumes increased low single digits mainly due to higher spirits and beer shipments. Growth was concentrated in Mexico, which reported record sales. Another positive sign was reported in Brazil, where low single-digit growth in shipments in the quarter was driven by gains in June.
 
North America sales volume declined due to lower shipments and the ongoing unfavorable mix seen in prior quarters. The company is mitigating the impact of the ongoing decline in megabeer in the US by positioning itself to benefit from the growing market of US beer imports through its joint venture with Constellation Brands and long-term sales contracts in Mexico.
 
The company now expects earnings from continuing operations attributable to the company for the full year 2017 to be in the range of $2.37 to $2.47 per share. The company expects cash provided by continuing operating activities for 2017 to be approximately $750 million and adjusted free cash flow to be approximately $365 million.